Commodities have entered a bull market. It's hard to argue otherwise with the moves we have seen over the past six months. Some of the areas of the Commodities market that have seen the most explosive moves are within Grains.
The Wheat Complex, Bean Complex, and Corn have all broken out of massive 6 + year bases, and those trains have definitely left the station. I've pointed this out in a past post, but have we reached a bend in the tracks that has slowed the procession and might allow us to hop on?
Let's look at a few charts in search of opportunities.
The advance in Soybeans has been stunning. It recently broke above the 685.4% Fibonacci expansion level, but is now trading back below that level as Friday's close nears. Similar patterns formed at the 261.8% and 423..6% levels. Both patterns resolved higher with strong moves towards the next expansion level overhead.
I think a strong close above 1380^0 in the next couple of weeks would be constructive. If Beans are above 1380^0, then the risk is our favor, and the next leg higher is most likely underway.
Soybean Meal ran into resistance at the 423.6% Fib expansion level last week. It consolidated near resistance levels for a few days then retreated this past week.
Unless a clear continuation pattern develops, the risk is only in our favor if price is above 468.0. Entering the Soybean Meal market without clear, well-defined risk below the 468.0 level would be reckless.
If you've followed my blog over the past couple months, you're probably aware of my affinity for Soybean Oil. It's for good reason.
It was the first market within the Bean Complex to breakout and close above its 2016 highs. I view Bean Oil as a leader within the complex and grains as a whole. It appears that Soybean Oil has broken out of a possible flag on the daily chart after finding support at the 100% Fib expansion level. It's also important to note that the 14-period RSI is sloping upwards. Notice that is not the case in Beans and Meal.
Could Soybean Oil lead the complex, and possibly the Grain market as a whole, in the next leg higher? I think it's possible, but I would like to see some follow through in price action early next week.
So, while the Grain Markets and Commodities as a whole are red across the board today, I see openings developing.
If we are patient and focus on managing risk, we may get a chance to jump on these runaway trains.
I will cover the rest of the Grain Market in Sunday's Weekly Report.
Thanks for reading! If you have any questions or comments, please feel free to contact me at ianculley@culleycharts.com
DISCLAIMER: All information and opinions expressed by Culley Charts are strictly that, and should not be construed as investment advice. Market participation comes with inherent risk, and the responsibility of managing this risk lies solely with each individual investor.
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